Does Citigroup’s strong earnings give investors the green light to buy the stock?


Citigroup (NYSE:C) stood out among the first wave of financial institutions to report its second-quarter results last week. The company beat expectations with its latest financial numbers, while many of its other high profile peers stumbled.

Like the federal Reserve continues its rate hike campaign, does mega-bank’s ability to execute make it a buying opportunity?

What do the latest earnings indicate?

Citigroup (C) released a strong earnings report last week. The financial giant reported higher-than-expected Q2 GAAP EPS, as well as better-than-expected revenue. Looking at the details, C delivered EPS of $2.19, beating estimates by $0.52. Meanwhile, the company disclosed revenue of $19.64 billion, up 12.4% from last year and beating baseline estimates of $1.32 billion.

After Citigroup announced its latest earnings report, the stock took off, jumping 13% that day. The shares have managed to extend those gains since, posting a 16% lead since its earnings announcement.

The post-earnings rally allowed C to pare some of the losses it had posted earlier in the year. Still, the stock remains lower for 2022 as a whole, slipping 16% since the end of last year. C also remains well off its 52-week high of $74.64.

While Citigroup delivered a positive earnings day on Wall Street, the same cannot be said for all of its competitors. C was able to part ways with names like JPMorgan Chase & Co. (JPM), Bank of America (BAC), Morgan Stanley (MS) and BlackRock (BLK) – all companies that missed second-quarter earnings.

Is it a purchase?

Wall Street has a somewhat mixed opinion of Citigroup. Seeking Alpha compiled ratings from 25 different analysts, with eight rating the company as a strong buy and four issuing buy ratings. Meanwhile, a slight majority on the street hold less than optimistic views. This includes 13 holding ratings and a strong sell opinion.

When it comes to Seeking Alpha’s quantitative ratings, the quantitative metrics scoring system considers C to be a Hold. The stock receives an F for growth, offsetting its A+ for profitability and A- for valuation. Here is a breakdown:

Alpha research contributors seem more bullish on the bank. For example, contributor Tim Travis thinks the company’s valuation and dividend are too good to pass up. Travis pointed out that Citigroup pays a dividend yield of 4.08% and trades at around 6 times forward earnings, with the potential to grow significantly from current levels.

IP Banking, another Seeking Alpha contributor, called Citigroup a strong buy, saying the bank would likely end up with excess capital that could be deployed for share buybacks.